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Arla Foods has announced it has terminated the membership of Arla Foods amba board director Jonathan Ovens following ‘serious failings in corporate governance’ in his role as chairman of Emerald Debtco.

UK Arla Farmers Co-operative (UKAF) said it had led to a ‘loss of confidence in Mr Ovens’ by the Arla Foods amba board of directors. The termination took place with immediate effect.

The decision leaves open a UKAF board position and a UK representative on the Arla Foods amba board of directors.

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Statement

Arla Foods amba, chairman Ake Hantoft said: “As a consequence of the decision taken by the UKAF Board to terminate the membership of Mr Jonathan Ovens, which the Arla Foods amba Board agrees with, Mr Ovens is no longer eligible to serve as a board member of Arla Foods amba and therefore leaves open a position as UK representative on the Arla Foods amba Board of Directors.

The due process to elect the replacement to the Arla Foods amba Board of Directors will now commence and the UKAF board, governed by its byelaws, will discuss what steps are required to fill the open position.

UKAF Chairman Johnnie Russell said: “This regrettable step has had to be taken as a last measure in a protracted process to resolve issues of corporate governance within Emerald Debtco Limited and takes place with immediate effect.

“Mr Ovens has been offered a direct contract by UKAF for the supply of milk.”

He added the Board had acted in the best interest of its farmers and in accordance with the Arla Foods Corporate Social Responsibility guidelines.

“It has been determined that serious failings in corporate governance by Mr Ovens in his role as Chairman of Emerald Debtco Limited are prejudicial to the interests of the Cooperative.

“These actions also led to a loss of confidence in Mr Ovens by the Arla Foods amba Board of Directors, which supports the UKAF decision.

“The decision means that Mr Ovens can no longer remain part of Arla Foods UK or a board member of Arla Foods amba and therefore leaves open a UKAF board position and that of a UK representative on the Arla Foods amba Board of Directors.”

Who are Emerald DebtCo?

In 2013, when Arla Foods Milk Partnership (AFMP), a group of farmers who individually had a contract to supply milk to Arla Foods UK, was invited to become owners of Arla Foods amba it set up a company wholly independent of Arla Foods called Emerald DebtCo Ltd (EDL).

This company enabled the AFMP farmers to secure a loan to buy their entry into Arla Foods amba via AMCo (which subsequently became UKAF).

The Board of EDL mirrors the Board of UKAF, with the same elected representatives.

EDL is currently liaising with HMRC with regards to the correct treatment of taxes and national insurance contributions in relation to payments for expenses paid by EDL to a number of its past and present Directors.

Arla Foods amba is an entirely separate entity to EDL. No action is being pursued against Arla Foods or Arla Foods amba and Arla have no responsibility whatsoever for the corporate and financial governance of EDL. Arla Foods provides accounting and treasury services to EDL.